The Medicare-Medicaid Accountable Care Organization (ACO) Model, an effort to improve the quality of care and lower costs for beneficiaries who are enrolled in both Medicare and Medicaid, has been announced by CMS. Current Medicare ACOs often do not have financial accountability for the expenditures of Medicaid beneficiaries attributed to their organization. The new Medicare-Medicaid ACO Model is designed to build on current Medicare Shared Savings Program (MSSP) ACOs by allowing MSSP ACOs to take on accountability for the quality of care and both Medicare and Medicaid costs for Medicare-Medicaid enrollees (also known as “dual eligible beneficiaries”).

Background

Medicare ACOs are made up of groups of doctors, hospitals, and other health care providers and suppliers who come together voluntarily to provide coordinated, high-quality care to the original Medicare fee-for-service beneficiaries. Section 3021 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) created the Center for Medicare and Medicaid Innovation, which provides for the testing of innovative payment and service delivery models. The MSSP (established by ACA section 3022) and other ACO initiatives were created to change the incentives for how medical care is delivered and paid for, moving away from a system that rewards the quantity of services to one that rewards the quality of health outcomes.

The new model

According to a CMS fact sheet, The Medicare-Medicaid ACO Model will allow new and existing MSSP ACOs to take on accountability for the full spectrum of Medicare Part A, Part B, and Medicaid costs for their patients. If Medicare-Medicaid ACOs in a state generate Medicare savings for their Medicare-Medicaid enrollees, states (as well as the Medicare-Medicaid ACO) may be eligible to share in those savings with CMS. States may choose from three options for when to begin the first 12-month performance period for the Model ACOs in their state: January 1, 2018; January 1, 2019; or January 1, 2020.

Through the Medicare-Medicaid ACO Model, CMS also seeks to encourage participation from safety-net providers in alternative payment models. Medicare-Medicaid ACOs that qualify as “Safety-Net ACOs” will be eligible to receive pre-payment of Medicare shared savings to support the ACO’s investment in care coordination infrastructure.

Eligibility and application process

CMS is accepting letters of intent from states that wish to work with CMS to design certain state-specific elements of the model, such as the details of the Medicaid financial methodology and shared savings/shared losses arrangements, selection of additional quality measures, and additional ACO eligibility requirements. States will also have the option to include additional Medicare-Medicaid enrollees not assigned under the MSSP and Medicaid-only beneficiaries in the target population for the Model.

CMS will enter into participation agreements with up to six states with preference given to states with low Medicare ACO saturation. Once a state is approved to participate in the model, a request for application will be sent to ACOs and health care providers in that state.

In addition to applying to participate in the Medicare-Medicaid ACO Model, ACOs will be required to apply to participate in the MSSP and ultimately sign a participation agreement to participate in the MSSP in order to participate in the Medicare-Medicaid ACO Model.

Accountable care organizations (ACOs) save money and provide a higher quality of care for their patients, according to an announcement from CMS. The assessment was made based on the 2015 performance year results for the Medicare Shared Savings Program (MSSP) and the Pioneer ACO model, which along with all ACOs, had combined total Medicare program savings of $466 million that year.

ACOs

ACOs are groups of physicians, facilities, and other health care professionals that agree to provide coordinated care to their patients to receive savings. ACOs use financial incentives to change behavior, such as paying more to physicians who coordinate care and use health information technologies. ACOs are judged on the care they provide, measured by various metrics. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) authorized two distinct ACO models.

The Pioneer ACO model, created by section 3021 of the ACA, is designed to support organizations with more experience in offering coordinated, patient-centered care. The program aims to test the payment arrangement of shared savings and shared losses, offering “higher levels of reward and risk than in the Shared Savings Program.” For the Pioneer program, ACOs agree to share their savings and losses with CMS, to a certain amount. Each Pioneer ACO had a minimum savings rate/minimum loss rate—if the gross savings/loss percentage was within that rate, the ACO neither received shared savings nor paid shared losses. If the ACO gained or lost more than their minimum rate, they either received a shared savings payment from CMS or owed CMS a shared loss payment, splitting the remaining amount.

In 2015, there were 392 MSSP participants and 12 Pioneer ACOs. They showed significant improvements in the quality of care offered to Medicare beneficiaries, with all 12 Pioneer ACOs improving their quality scores by more than 21 percentage points from 2012 to 2015. MSSP ACOs that reported in both 2014 and 2015 showed improvements on 84 percent of the quality measures reported in both years, and average quality performance improved by more than 15 percent on key preventive care measures. Overall, 125 ACOs qualified for shared savings payments by meeting quality performance standards and their savings threshold.

With a number of new providers participating in accountable care organization (ACO) initiatives, this care model is now available in 49 states, plus the District of Columbia. CMS has announced 121 new participants in these programs, which allow providers to offer better quality, coordinated care to reduce costs and burdens on patients. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) emphasized quality and a patient-centered view of care, offering various tools like Medicare ACOs to move the health care system away from traditional fee-for-service payment arrangements.

Types of ACOs

The Medicare Shared Savings Program (MSSP), created by section 3022 of the ACA, allows providers to work together and reduce redundancy in patient care. Instead of being paid more for ordering more tests, providers are rewarded for quality of care and are able to share in the savings generated by the program. On January 1, 2016, 100 new ACOs and 150 renewing ACOs were participating in the MSSP, serving 7.7 beneficiaries. Some MSSP ACOs are participating in the ACO investment model (AIM), which provides pre-paid shared savings. CMS hopes that this model will encourage more ACO formation in underserved areas.

The Pioneer ACO model is for providers already experienced in care coordination, allowing them to shift toward a population-based payment model. This model involves a higher level of risk along with a generally higher level of shared savings than the MSSP. The Next Generation model was born from the prior models and includes strong patient protections and financial incentives for providers.

Goals

HHS announced last January that it intended to move 30 percent of traditional fee-for-service payments to alternative models by 2016. At the time, ACOs had already saved the Medicare program $417 million. CMS noted that those participating in ACOs in 2013 and 2014 also improved on 27 quality measures.